I used to live in a poor, third world country (India) where I freely transferred money between my bank account (a savings account) to accounts held by my friends in different banks, and different countries using just the Internet, net banking. It took less than 24 hours for the money to appear in the other person's account.

Now, here I am in the U.S., the mecca of Internet startups and general web awesomeness, and I find that neither Capital One nor the United Nations Federal Credit Union accounts I have will allow me to transfer money to a Bank of America account that belongs to my landlord. I would like to sit at my computer, add his account, hit Transfer, and have the money appear in his account. It seems that all they can do is either mail him the check, or I can go to the bank and deposit it.

I would like to understand why transferring money in the United States is so difficult. Is there a reasonable explanation?

  • 2
    I believe you can do this with some banks, but it's not a high-profile thing. Here is an article that touches on the topic: bucks.blogs.nytimes.com/2010/03/11/…
    – BrenBarn
    Dec 30 '13 at 20:50
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    Thanks for the link. It's extremely insightful, and extremely depressing. The article's comments are full of sentiments like "In Germany/Mexico/Brazil, this is super easy, just go to Bank X's website and...". The logic that the banks give is just terrible.
    – user12420
    Dec 30 '13 at 20:57
  • 4
    It's the same in Canada (although you can email money here which is cool), drives me nuts having come from the UK where it was simple. It's even hard between your own accounts at different banks Jan 6 '14 at 20:29
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    This is also so simple in Australia. We are supposed to be heading for a cashless society - sounds like the USA is lagging behind the rest of the world.
    – Victor
    Sep 19 '14 at 21:40
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    @TienDo I think KevinFegan is being facetious and picking on your use of the word "cash". A quick look at Google Translate (aka the worst dictionary in the world) shows that the Vietnamese for "money" can also be used to mean "cash".
    – Aaron F
    Jul 27 '18 at 11:14

While the US hosts most of the world's innovative startups, its own financial and banking systems are very slow to change.

The infrastructure exists, however the ACH transfers are not wide-spread between individuals. Banks much prefer the option of bill-pay (i.e.: as you said, mailing a check, something in other countries people wouldn't even think of), than letting you do it yourself.

Why? Because they can. There's no real competition over consumers, and the consumers themselves are not educated or sophisticated. Thus, the banks are comfortable with the lack of innovation - since as long as they are all lacking innovation - consumers won't demand it because they won't even know things are possible. And it is definitely cheaper for the banks not to innovate and keep your money for a week while the bill-pay check is en route, than try and develop new things.

In other countries, the regulator would step up and force banks to develop new infrastructure and widen the options, but in the US regulation is considered a bad thing, and people are easily swayed, being uneducated and uninformed, by the corporations to support politicians who act against their (people's) best interest in protecting the corporations and reducing and limiting the regulators even further.

  • 3
    Damn. Exactly the reasons I was hoping wouldn't be the case. Thanks for your answer.
    – user12420
    Dec 31 '13 at 12:33
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    To anyone who reads this, I would like to say that littleadv was right. Eventually, ACH transfers are what came closest to the type of internet banking I was used to. No fee, ala wire transfer, and it gets processed in 1-2 days. However, they send you an email asking you to confirm that you initiated the transfer.
    – user12420
    Jan 6 '14 at 17:46
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    I'm not sure regulators forcing something the market clearly doesn't want is a big win for anyone though. Clearly at the end of the day, US bank customers don't care about ease of transferring money to each other. If they did, someone would offer it, and people would switch to get it. And there are things like popmoney.
    – Andy
    Jul 2 '17 at 18:57
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    There's no real competition over consumers - citation needed. I live in a small town (population <2200) and even we have a half-dozen different banks available, not including national banks/credit card companies. I regularly find advertisements in my mail attempting to persuade me to open an account with a different bank. I agree with Andy, the problem is less "lack of competition" and more "US consumers don't care enough about the feature to make it a competitive feature worth implementing".
    – jmbpiano
    Jul 25 '18 at 19:06

The regulatory environment here is the main driver. In Australia, where I spent 10 years developing software for lenders/banks you can operate the same way as described in the original question (overnight transfer to anyone) and cheques are not only never used, if you try, people will laugh at you. In Australia 4 banks control > 90% of the market, they realize that overnight transfers that involve them 0% is more efficient (read: costs less) for all of them.

This will change in the next 1 - 2 years in the US I believe however, as pressures from technologies like bitcoin and technology providers like dwolla and venmo start to get a foothold and broader visibility.

  • 24
    Change in 1-2 years? More like 10-20 years
    – Pacerier
    Jan 3 '14 at 16:40
  • 7
    Well, it's been over a year. Hasn't changed much, if at all.
    – mfinni
    Apr 22 '15 at 14:28
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    2 years... are we there yet? =) Jan 7 '16 at 4:25
  • 5
    3 years, 4 months and 25 days....
    – NPSF3000
    May 26 '17 at 0:06
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    4 years and counting ...
    – prl
    Mar 13 '18 at 8:48

Many banks here have some kind of service that will do this for you. For example, Wells Fargo has 'Bill Pay On Line'. You can use this to make regular payments - for your rent or mortgage, car payment, utilities and so on. You can also go on line and pay any company or person. If they don't have the facilities to accept electronic payment, the bank will actually mail them a check.

See https://www.wellsfargo.com/online-banking/bill-pay/ and https://www.wellsfargo.com/wfonline/tour/olb/high_flash?deep_link=2

Bank of America has something similar, but this forum won't let me post more than two links. Go to google and search the name of the bank with 'send payments' or 'pay on line'.

  • Yep. My CU's system will attempt to send electronic funds transfer, and if it can't do so will print and mail a check. Obviously I need to give it the routing information needed to do so (bank and account numbers, payee, address), but it's pretty painless, and can be set up for repeating payments such as mortgage/rent. If your bank doesn't offer this, seriously, shop around for one that does. Of course this does require that the payee be willing to give you his account info, but that's all on every check he writes anyway, so...
    – keshlam
    Sep 19 '14 at 2:14
  • Yes, but you can't do electronic payments to "arbitrary" recipients. For electronic payments, the recipient must already pre-exist in the banks system, usually only large companies like utilities, lenders, etc..., but not to pay your friend, or your "average" small scale landlord. For that the bank's Billpay will send a paper check through the mail. One solution would be if the bank would allow you to specify routing and account numbers for the recipient, but few if any banks allow this for Billpay, and few provide free automated external bank transfers. Jul 26 '18 at 0:48
  • @Kevin said "Few provide free automated external bank transfers". I haven't run into a checking account that doesn't. The ability to use ACH information to configure bill pay (where the amount can be filled in from an electronic statement), instead of external transfer (where the amount must be specified when the transaction is arranged) does appear to be as rare as you say.
    – Ben Voigt
    Sep 23 '18 at 14:55

Simple. If they don't allow you easily transfer money then they get to keep your money longer and earn more interest. Not to mention they can continue to charge fees for wire transfers. When I was in Colorado Springs all the banks allowed free bank to bank transfers. Why? Because their clients demanded it. Most of their clients were military members who needed to be able to send money home or to relatives in other states etc. When I moved to Texas I could not find a single bank that allowed free bank to bank tranfers. They had varying fee schedules for wire tranfers ranging from $7 to as high as $22. When I asked why they charged a fee to send money basically over the internet I was told that the Feds made them charge a fee. Big bunch of bull but I had to have a bank. Banks, in this country, will make it as hard as they legally can for you to remove your money from their greedy little mitts. I am going through this now with a bank in Idaho. Supposedly I can send funds bank to bank but I have to jump through a bunch of hoops that are difficult because I work during the bank hours. The bill pay site says I can do external tranfers but the button to "set up external transfers" is mysteriously missing. So I have to fill out paperwork in the presence of someone at the bank and submit it. I was even told that it had to be typed or it may be refused. The more I travel the more I mistrust banks and their schemes to keep my money.

  • There's actually quite a bit to a wire transfer. Although their costs are very low, certainly below $0.50 / transaction.
    – NotMe
    Oct 19 '15 at 20:07
  • This is the actual answer.
    – Fattie
    Jul 1 '18 at 13:02

Capitol One and Bank of America both use Zelle which allows for a really simple transfer of funds. I don't have a Bank of America or Capitol One account but I do use a bank that also partners with Zelle and all I need is the recipients phone number or email address and I can send them money with a few clicks through the app or via the banks website. Since BOA and Capitol One are Zelle partners it should be a near instant transfer of money.

The wiki entry has more information on the banks that are also partners: https://en.wikipedia.org/wiki/Zelle_(payment_service)

  • 1
    My (US) online bank provides external bank to bank transfer features, so I haven't looked into Zelle, but I've heard that their TOS is very obtrusive and I've seen recommendations against using them because of that. Jul 26 '18 at 0:55
  • Zelle still doesn't work for many smaller banks and doesn't work for business accounts.
    – Alex K
    Aug 14 '18 at 3:28
  • And last I checked (around 2018), Zelle has per-transfer limits that means that I'd have to pay my rent with two transfers on successive days.
    – davidbak
    Oct 31 '19 at 18:11